Mt. Gox
From Invertopedia, the encyclopedia of how things fail
Mt. Gox was a bitcoin exchange in Japan that handled about 70% of the world's bitcoin trades by 2013[1]. In February 2014 it halted withdrawals, went offline and filed for bankruptcy protection in Tokyo, with about 850,000 bitcoins missing[1][3]. About 200,000 of them turned up in an old wallet weeks later[3]. Creditors began getting coins back in July 2024, and the deadline to finish paying them has now been pushed to October 31, 2027[5][6].
Contents
The bet
That an exchange could run off its own records. Customer balances lived in Mt. Gox's database, coins moved between a hot wallet and paper cold storage, and the books were assumed to match the blockchain. According to an independent investigation, the cold storage was not continuously monitored, and staff may simply have kept refilling a hot wallet that was leaking[7].
What happened
| 2010 | Jed McCaleb turns a domain bought for a Magic: The Gathering card exchange into a bitcoin exchange.[1] |
|---|---|
| Mar 2011 | McCaleb sells Mt. Gox to Mark Karpelès.[1][2] |
| Jun 2011 | A hacker sells off bitcoin from a compromised account, crashing the price on the exchange. Details of 60,000 users are stolen.[1] |
| 2013 | Mt. Gox handles about 70% of all bitcoin trades worldwide.[1] |
| Feb 7, 2014 | Bitcoin withdrawals are halted.[1][2] |
| Feb 24, 2014 | Trading is suspended and the website goes offline.[1][2] |
| Feb 28, 2014 | Mt. Gox files for bankruptcy protection in Tokyo. It reports 744,408 customer bitcoins and 100,000 of its own as stolen.[1][2] |
| Mar 2014 | It says it found 200,000 bitcoins in old-format wallets, identified on March 7.[3] |
| Mar 15, 2019 | The Tokyo District Court convicts Karpelès of tampering with computer data and acquits him of embezzlement.[4][8] |
| Jul 2024 | Repayments in bitcoin and bitcoin cash begin through exchanges including Kraken and Bitstamp.[5] |
The kill shot
Coins leaked out of its hot wallet for years, and by an independent investigation's account nobody was watching the coins it actually held.
Most of the loss was not one great heist. WizSec, an independent team whose work is not an official finding, concluded that "most or all of the missing bitcoins were stolen straight out of the MtGox hot wallet over time, beginning in late 2011," and that, as far as it understood, Mt. Gox "did not have continuous monitoring of its cold storage"[7]. By its estimate the exchange was "technically insolvent since at least 2012"[7].
A count of the coins actually on the blockchain, compared with what customers were owed, would have shown the gap. WizSec's advice: "Always. Monitor. Your. Bitcoins."[7]
Red flags ignored
- An early breach. The June 2011 hack crashed the price on the exchange and exposed 60,000 users' details[1].
- Nobody watched the vault. Cold storage was paper wallets with no continuous monitoring, according to WizSec[7].
- Too much of the market in one place. About 70% of the world's bitcoin trades ran through one exchange[1].
- The books could not be trusted. Its CEO was later convicted of tampering with the exchange's electronic records[4][8].
The cost
About 850,000 bitcoins went missing: 744,408 belonging to customers and 100,000 of the exchange's own, about 7% of all bitcoin at the time[1]. They were worth about half a billion dollars then[4]. The 200,000 found in March 2014 were worth about $120 million[3].
In 2023 the trustee set aside about 142,000 BTC, 143,000 BCH and 69 billion yen for creditors[9]. By March 2025 about 19,500 creditors had been repaid[9][6]. In October 2025 the deadline moved from October 31, 2025 to October 31, 2026[9][10]. On October 16, 2026 it moved again, to October 31, 2027, because some creditors had not finished the required steps and others hit payment problems[6][5]. Wallets tied to Mt. Gox still held about 34,400 bitcoins, worth roughly $2.8 billion[6].
The inversion
Reconcile against the source of truth, not against your own records. Count what is actually on the chain every day, and compare it with what you owe.
What survived
The coins that were left, and the creditors' claims to them. Repayments began in July 2024[5], ten years after the collapse.
Karpelès was arrested in August 2015[4]. In March 2019 he was given two and a half years in prison, suspended for four years; prosecutors had asked for ten[4][8]. The judge said he had "harmed the users' trust greatly"[4]. A Japanese high court upheld the conviction in June 2020[11].
References
- ^ “Mt. Gox”. CoinDesk. The 2010 launch, the sale to Karpelès, the June 2011 hack, the 70% market share, the February 2014 halt, shutdown and filing, the 744,408 customer and 100,000 company bitcoins, and the 2015 arrest.
- ^ “Mt. Gox”. Wikipedia. Supporting dates: the March 2011 sale, the April 2013 market share, and the February 28, 2014 filing in Tokyo.
- ^ “Mt. Gox finds 200,000 missing bitcoins in old wallets”. AP via Fox News, March 21, 2014. The 850,000 missing bitcoins, the 200,000 found on March 7 in old-format wallets, and their value.
- ^ “MtGox bitcoin founder gets suspended sentence for data tampering”. AFP via Arab News, March 15, 2019. Karpelès's conviction for data tampering, acquittal on embezzlement, the suspended sentence, the judge's words, the 2015 arrest and the value of the lost coins.
- ^ “Mt. Gox creditors face another year of waiting as repayment deadline slips to 2027”. CryptoSlate, October 19, 2026. Repayments beginning in July 2024 through Kraken and Bitstamp, and the October 2026 extension to October 31, 2027.
- ^ “Mt. Gox Extends Creditor Repayment Deadline to 2027”. Cointelegraph, October 20, 2026. The October 16, 2026 notice, the new deadline, the reasons, and the roughly 34,400 bitcoins still in Mt. Gox wallets.
- ^ “The missing MtGox bitcoins”. WizSec (Kim Nilsson), April 19, 2015. The unofficial investigation: hot-wallet theft from late 2011, no continuous monitoring of cold storage, insolvency since at least 2012.
- ^ “Mt. Gox CEO Mark Karpeles found guilty on only 1 count, given a suspended sentence”. The Block, March 14, 2019. The single count of electronic record tampering, the acquittals and the prosecutors' 10-year request.
- ^ “Mt. Gox pushes back repayment deadline by another year”. The Block, October 27, 2025. The 2025 extension to October 31, 2026, the assets earmarked for creditors in 2023, and the 19,500 creditors repaid by March 2025.
- ^ “Mt. Gox Pushes Back Bitcoin Repayments to October 2026”. Decrypt, October 27, 2025. The 2025 extension and the reasons for it.
- ^ “Japanese Court Upheld Former Mt Gox CEO's Conviction for Manipulating Data”. Bitcoin.com News, June 12, 2020. The Tokyo High Court upholding Karpelès's conviction.